C-125/76

JUDGMENT OF THE COURT (SECOND CHAMBER) 11 OCTOBER 1977 <apnote>1</apnote>

Firma Peter Cremer v Bundesanstalt für landwirtschaftliche Marktordnung (preliminary ruling requested by the Hessisches Finanzgericht)

feeding-stuffs'

'Export refunds for compound

Case 125/76

1. Agriculture — Common organization of the markets — Compound feeding-stuffs for cattle — Export to third countries Refund — — Grant — Conditions —

under Regulation No 171/64 of the Council of 30 October 1964 and

Commission of 30 October 1964 be Regulation No 171/64 of the

granted for compound animal Commission only where cereals or

feeding-stuffs containing either cereals products to which Regulation No 19 or cereal-based products or milk or of the Council of 4 April 1962 on the milk products. progressive establishment of a

2. Having regard to the objectives of the common organization of the markets

system of export refunds, an export in cereals applies are in fact contained refund for a compound animal in the mixture in significant

FIRMA PETER CREMER , Hamburg,

and

BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG (Federal Office for Agricultural Market Organization), Frankfurt am Main,

on the interpretation and validity of Regulation No 166/64 of the Council of 30 October 1964 on the system applicable to certain classes of compound

animal feeding-stuffs and on the interpretation of Regulation No 171/64 of

the Commission of 30 October 1964 laying down the conditions for the grant of refunds on the export to third countries of certain classes of compound

Facts and issues

The facts, procedure and observations (Journal Officiel, p. 933) in order to

submitted under*

Article 20 of the facilitate the export to third countries of

Protocol on the Statute of the Court of cereals or processed products based on

Justice of the EEC may be summarized cereals at the prices prevailing on the

progressive establishment of a common based on milk powder used in the

organization of the markets in cereals feeding of animals by Article 14 (2) of

CREMER v BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG

Regulation No 13/64 of the Council of 5 which is also in Hamburg. An February 1964 on the progressive investigation carried out by the German establishment of a common organization customs investigation authority revealed of the markets in milk and milk products inter alia that a large part of the tapioca (Journal Officiel, p. 549). chips had been sifted out of the product

in Denmark and thereupon sold and

The rules on the grant of export refunds delivered to an undertaking in the

1964 laying down the conditions for the of the goods in the country of

grant of the refund on the export to third destination within the meaning of the

countries of certain classes of compound German provisions relating to refunds, feeding-stuffs (Journal Officiel, p. 2758). which laid down those requirements as a

pre-condition for a finding that export to Between 9 December 1964 and 9 March a third country had taken place. 'Nordkraft'

1965 Kraftfutterwerk C.F. Furthermore, the starch content was

Günther & Co. mbH, whose registered reduced below 50 % through the sifting office is in Hamburg, exported from the so that the product no longer remaining Federal Republic of Germany to fulfilled the conditions for the grant of a

This product consisted of 73 % tapioca gericht.

chips, 2 % tapioca flour, 22 % soya

oil-cake and 3 % mineral matter; it By order dated 1 December 1976 the

contained more than 50 % starch. VIIth Senate of the Finanzgericht stayed

the proceedings and referred the Günther & Co. received from the following questions to the Court of Einfuhr- und Vorratsstelle für Getreide Justice for a under preliminary ruling und Futtermittel, the predecessor of the Article 177 of the EEC Treaty: Bundesanstalt fur landwirtschafdiche 1. Does Regulation No 171/64 of the

Marktordnung, export refunds in the Commission of the EEC apply also form of import licences for the import to compound animal feeding-stuffs free from levy of a quantity of cereal without the addition of powdered

JUDGMENT OF 11. 10. 1977 - CASE 125/76

cereals had in fact to be used is to be under tariff heading 23.07 of the

regarded as a compound animal Common Customs Tariff a standard

feeding-stuff made irrespective of cereals; or (b) is refund applicable of the

the expression 'the quantities used to quantity whether negligible or

be regarded as notional for calculating substantial of products upon which

to munities, on 1 March 1977 by the

which Regulation No 19 applied and, Council of the European Communities, in particular, did the admixture of on 10 March 1977 by the Cremer 2 % of a product upon which a levy undertaking, the plaintiff in the main

was chargeable, such as tapioca flour, action, and on 18 March 1977 by the

suffice to demand in this way a refund Bundesanstalt für landwirtschaftliche

amounting to 100 % exemption from Marktordnung, the defendant in the

the levy for imports of cereals from main action.

derived from products to which mitted to the Court Regulation No 19/62 applied?

5. If the first part of Question 3 is Firma Peter Cremer, the plaintiff in the answered in the negative, the second main action, first of all submits that the

part thereof in the affirmative and if reference for a preliminary ruling is Question 4 is also answered in the unnecessary and therefore inadmissible:

negative, are not the relevant the question whether tapioca flour was

provisions of Regulation No added to the product in question is a

166/64/EEC invalid to the extent to question of fact which it is for the

after the expression must processing Denmark is irrelevant since the criterion analogy with its use in Article 4 of

is at what date the product is put into Regulation No 166/64 be regarded as a

free circulation. Finally, the Einfuhr- und fictitious concept for the quantities of

Vorratsstelle has never contested that a cereals to be taken as a basis for the

compound feeding-stuff which contains calculation of the refund.

only 2 % of a product falling under

Finanzgericht: criteria. Such an objective criterion is the

intended use as a feeding-stuff and

(a) Article 1 of Regulation No 171/64 likewise the addition of one of the

shows clearly by reference to Regulation products coming under Regulation No No 166/64 that the first-mentioned 19, irrespective of the quantity added. regulation applies in particular to preparations used in feeding-stuffs This is also the criterion adopted as the

'containing cereal or products to which basis for the German regulation on

Regulation No 19 or Regulation No refunds for cereals and rice of 24 16/64/EEC applies'; it thus applies to November 1964 (Bundesgesetzblatt 1964

words 'for each of the three kinds of criterion. This view is shared by the

cereals on the basis of the quantities Government of the Federal Republic of used'

in Article 1 (1) (a) of Regulation No Germany. 171/64 relate solely to the computation

of the amount of the refund which again The starch content of the preparation as

is based on the computation provided for a whole must be considered in in Articles 4 and 9 (2) of Regulation No determining the coefficients dependent 166/64 of the variable component on the on the starch content of the compound

basis of the maize, barley and sorghum. feeding-stuff applicable under Article 10 The three kinds of cereals(maize, barley in conjunction with Article 4 and Table and sorghum) are mentioned as an A in the Annex to Regulation No. abstract criterion for calculation only 166/64. because they contain starch and are the

does not comply with the provisions of in accordance with the rule on levies in

Community law. That decision cannot, Article 4 of Regulation No 166/64: the

however, be applied to the 'quantity 'three kinds used'

present case. of the of

The levy is nothing formula cereals'

at that time was compulsory other than a

according to which the refund must be should not therefore in principle depend calculated. on the proportion of the components to

which Regulation No 19 applied. Of The Bundesanstalt für landwirtscbaft­ course it must be possible to establish

liche Marktordnung, the defendant in clearly and with certainty that these

the main action, stresses that in components are in the product; this is answering the questions referred to the not the case where the proportion is only Court for a preliminary ruling guidance 2 % of a product subject to levy such as must be obtained from the case-law of tapioca flour. The components subject to

the Court which explained and the levy must have been added to the

confirmed the relevant principles of compound feeding-stuff in the process of Community law on refunds for the manufacture. The grinding down of the

apply also to mixed feeding-stuffs not that the relevant coefficients for

containing milk powder. calculation were determined on the basis of the starch content of the product

(b) In so far as the right to a refund being exported. For preparations these

exists in respect of compound coefficients vary according to the starch

feeding-stuffs owing to their containing content of the product irrespective of

cereals or products to which Regulation whether or not the starch content is No 19 or Regulation No 16/64 is derived from ingredients to which

basically from products to which lation No 171/64 of the Commission Regulation No 19 applied. Opportunities implementing Regulation No 166/64 of

for abuse were revealed only when the Council. How far the Member States individual exporters went over to adding have made use of this power does not

to their preparations manufactured in the have to be considered in the present case.

Federal Republic of Germany ingredients having a high percentage of starch to Article 10 (1) of Regulation No 166/64 which Regulation No 19 did not apply. however provides that 'in trade with third The determination of the maximum countries ... the amount of refund which

amounts of refund was thus brought into a Member State may grant shall be fixed question; it became possible for refunds after taking account in particular of the

to rise far above the amount necessary to situation of the world market and the

the fifth question concerning the validity according to the starch content of the

of Regulation No 166/64. cereal feeding-stuffs; no flat rate has therefore been laid down. The facts at issue in the main action are

not comparable with those in Case Consideration of the fifth question

95/75. Case 95/75 was concerned with discloses no factor of such a kind as to

the validity of regulations of the affect the validity of Regulation No Commission which were adopted in 166/64. implementation of a regulation of the

Council in which it was laid down that The Commission observes in general that

should be granted for which products

and for which exports. The regulations The questions referred to the Court for a were in the nature of authorizations in preliminary ruling should be answered as

favour of the Member States restricted as follows: to their subject-matter.

(a) As a regulation implementing Article 10 of Regulation No 166/64, Refunds were payable in respect of all Regulation No 171/64 applied to all compound feeding-stuffs for which compound feeding-stuffs in respect of refunds were provided either under which in accordance with that regulation Regulation No 19 or Regulation No export refunds could have been granted 13/64. Article 1 of Regulation No 166/64 in trade with third countries. These listed these products in a single list and products were defined in Article 1 of the in an alternative and not a cumulative regulation and also include compound manner. feeding-stuffs without the addition of

powdered milk. That provision was an enabling rule and

as such did not lay down any particular (b) Regulation No 171/64 does not use minimum content for cereal ingredients. the concept 'compound feeding-stuffs based on cereals'. Article 1 thereof Article 1 of Regulation No 166/64 thus contains a flat-rate model computation to did not make entitlement to the refund determine the maximum refund dependent upon the presence of one of allowable which by means of the the kinds of cereals on which the coefficients in the Annex to Regulation calculation under Article 1 (1) (a) was No 166/64 took account of the starch based; it simply required that one of the content but not of the proportion of a products referred to in Regulation No 19 particular cereal in the products being should be an ingredient. In determining exported. The expression 'the quantities the flat-rate amount of the refunds this used'

Article 1 (1) (a) of Regulation No 171/64 With regard to the question whether the the decisive factor was as a rule not this

relevant starch content under the Annex proportion but the starch content.

to Regulation No 166/64 must have originated exclusively from the cereal (d) Such starch content was the starch

products which were added it should be content of the products exported. The observed that no such limitation can be normal rules contained no limitation on

CREMER v BUNDESANSTAIT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG

the contents to the effect that such starch question whether the Commission in content should derive from products to fixing the export levies as it was required which Regulation No 19 applied. There to do had or had not respected the

such enabling rules by reference to the judgment of the Court in Case 95/75: The Advocate General delivered his that case was concerned simply with the opinion at the hearing on 14 July 1977.

Decision

1 By order dated 1 December 1976 received at the Court Registry on 22

December 1976 the Hessisches Finanzgericht submitted to the Court four questions on the interpretation of Regulation No 166/64 of the Council of 30 October 1964 on the system applicable to certain classes of compound animal feeding-stuffs (Journal Officiel 1964, p. 2747) and Regulation No 171/64 of the Commission of 30 October 1964 laying down the conditions for the grant of refunds on exports to third countries of certain classes of compound

feeding-stuffs (Journal Officiel 1964, p. 2758) and a question on the validity of the aforesaid Regulation No 166/64.

2 Before the questions put by the national court are considered it appears

Articles 6 (3) and 14 (3) of Regulation No 13/64 of the Council of 5 February 1964 on the progressive establishment of a common organization of the

market in milk and milk products (Journal Officiel 1964, p. 549) contained similar provisions on the grant of refunds on the export of preparations of

feeding-stuffs containing milk powder or certain other milk products.

a On the basis of those provisions Regulation No 166/64 of the Council determined the system applying to the import and export of certain classes of compound feeding-stuffs. Article 1 of that regulation defines such compound

feeding-stuffs by reference to certain subheadings of heading No 23.07 of the Common Customs Tariff which at the time read as follows:

Sweetened forage; other preparations of a kind used in animal feeding ...

Article 10 of the regulation provides that the Member States may in trade

with third countries grant a refund taking into account in particular 'the

situation of the world market and the market prices of the products relevant

for the computation of the variable component'; according to the first indent of Article 4 that regulation, which governs the computation of the 'variable

barley Article 10 component'

the products are maize, and sorghum. (2) provides that the detailed implementing provisions on the grant of the refund on export to third countries should be adopted by the Commission according to the so-called 'Management Committee procedure'.

feeding-stuff, the coefficient being determined on the basis of the 'starch content'.

6 It appears from the order referring the matter to the Court that between December 1964 and March 1965 the plaintiff in the main action exported to

Denmark animal feeding-stuffs consisting of 73 % tapioca chips, 22 % broken soya, 3 % mineral matter and 2 % tapioca flour, though there is no

agreement about the addition of the last-mentioned ingredient. It is not

contested that this feeding-stuff, apart from the tapioca flour, consisted of

products not coming under Regulation No 19/62. It is also agreed that the

8 The first question asks whether Regulation No 171/64 of the Commission

also applies to compound animal feeding-stuffs without the addition of

powdered milk.

9 The reason for this question is that Regulation No 171/64 (like Regulation No 166/64 of the Council on which it is based) is founded both on

Regulation No 19 relating to the cereal market and Regulation No 13/64

relating to the milk market so that doubts might arise as to whether the feeding-stuff referred to in the regulation of the Commission must contain in

feeding-stuffs, namely such as contain not less than 50 % by weight of

powdered milk and such as contain cereals or other products to which

Regulation No 19 applies.

10 The answer must therefore be that Regulation No 171/64 of the Commission applies also to compound animal feeding-stuffs not containing powdered

milk.

Second and third questions

taken as the basis for the refund (in the same way as in Article 4 of Regulation No 166/64 of the Council for the charging of the levy). The third

question, which is closely associated with the previous question, asks whether

with reference to the possibility of granting a refund for compound animal

feeding-stuffs (Article 1 (d) of and the annex to Regulation No 19/62 of the Council; Article 1 of Regulation No 166/64 of the Council) it depended upon the extent to which the animal feeding-stuff 'contained products'

to which

Regulation No 19 applied and, in particular, whether the admixture of 2 % of

feeding-stuff contains an ingredient coming under the Community rules no matter what the amount is. The Commission supports this view and considers 'model for calculation'

that the said provisions contain a determining the

maximum amount of refund and lay down no requirements regarding the actual composition of the compound feeding-stuffs. Although the defendant

CREMER v BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG

in the main action admits that the manner of computation is determined by Regulations Nos 166/64 and 171/64 on a flat-rate and largely fictitious basis, it nevertheless takes the view that the application of those provisions cannot

be extended to abusive practices involving claims for the payment of refunds

refunds are up for the difference between the prices within intended 'to make

the exporting Member State and those on the world market'. It continues:

That difference may be properly assessed for the Member States on the basis of that applying to the basic products. Accordingly the refund must be calculated for those products on the basis of that which applies to their basic ingredients and in proportions varying according to the quantities involved'. It appears clearly from these recitals that the objective of the refund on export to third countries is to compensate for the effect on the prices of the

compound feeding-stuffs of the rules applicable to the ingredients used.

u From this it follows, as the preamble to Regulation No 171/64 stresses, that

the refund must be proportionate to the amount of the basic products subject to an organization of the market in the composition of the compound

JUDGMENT OF 11. 10. 1977 - CASE 125/76

15 The questions referred to the Court for a preliminary ruling should therefore be answered to the effect that apart from compound feeding-stuffs containing not less than 50 % by weight of powdered milk, a refund on the export of a compound feeding-stuff on the basis of Regulation No 166/64 of the Council and Regulation No 171/64 of the Commission can be granted only where cereals or products to which Regulation No 19 applies are in fact contained in the mixture in significant proportions.

The fourth question

16 The fourth question asks whether the coefficients which, pursuant to Article

10, together with Article 4 of Table A of the Annex to Regulation No 166/64, are to be applied according to the starch content of the animal feeding-stuff with due regard to Article 15 thereof ('cereals actually used in compound ...

feeding-stuffs') are to be interpreted as meaning that the starch content of a product which determines the coefficient had to be derived from products to which Regulation No 19/62 applied.

applicable without its being necessary to distinguish, for the determination of

the starch content, between the ingredients of a compound feeding-stuff

coming under Regulation No 19 and other ingredients.

18 The answer should therefore be that for the purposes of applying the

coefficients laid down by Annex A to Regulation No 166/64 the starch

content of the preparations referred to therein must be considered in the light of the compound feeding-stuff as a whole and not simply with regard to the

fixing a levy).

20 The reference by the Finanzgericht to the judgment of the Court of 9 March 1976 (Case 95/75 EFFEM v Hauptzollamt Lüneburg [1976] ECR 361) shows

that the court making the reference has doubts about the validity of

Regulation No 166/64 since it might lead to the grant of unjustified

advantages since in calculating the export refunds it makes no distinction

according to whether the ingredients of a compound feeding-stuff fall under the agricultural rules of the Community or not.

the national authorities were to regulate the market for the products in question at their own discretion.

22 In these circumstances the validity of Regulation No 166/64 is not open to

challenge.

Costs

23 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as these

proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the Hessisches

export to third countries of certain classes of compound

feeding-stuffs applies also to feeding-stuffs not containing powdered milk.

2. Apart from compound feeding-stuffs containing not less than

50 % by weight of powdered milk, a refund on the export of a compound feeding-stuff on the basis of Regulation No 166/64 of the Council of 30 October 1964 on the system applicable to

certain classes of compound animal feeding-stuffs and

Regulation No 171/64 of the Commission can be granted only where cereals or products to which Regulation No 19 of the

applicable.

4. Consideration of the fifth question has disclosed no factor of

such a kind as to affect the validity of Regulation No 166/64 of the Council.

Pescatore Mackenzie Stuart Touffait

Delivered in open court in Luxembourg on 11 October 1977.

A. Van Houtte P. Pescatore